Consumer Bureau Examining Impact of Buy Now, Pay Later Products
Move Comes as Products like Klarna, Afterpay Gain Popularity
The Consumer Financial Protection Bureau (CFPB) has announced an inquiry into the practices of the Buy Now, Pay Later (BNPL) industry in light of the popularity of products such as Klarna and Afterpay. The move comes as the major credit bureaus are adding information from Buy Now, Pay Later to credit reports.
In a blog post explaining the inquiry, Ashwin Vasan of the CFPB says:
Use of BNPL has seen astronomical growth. Companies like Affirm, Afterpay, Klarna, PayPal, and Zip (formerly Quadpay) have become almost ubiquitous in the retail market since the pandemic. This past holiday season, usage spiked even higher, especially among young people.
Cause for Concern?
Vasan says the BNPL space can seem innocuous but could be problematic for consumers:
For the buyer, it may seem like they are getting something for nothing. And it can be appealing because not only is it convenient but instead of an upfront cost of $100, they pay $25. But we are concerned there may be some…
